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Nvidia on edge of surpassing Apple as second-most-valuable firm

NVIDIA logo is visible near computer motherboard in this image shot January 8, 2024.

March 8 (mod1s) - Nvidia (NVDA.O), opens new tab is nibbling at the heels of Apple (AAPL.O), opens new tab to become the world's second-most-valuable corporation, as investors cannot get enough of the semiconductor giant whose processors power popular artificial intelligence applications such as ChatGPT.
 
An AI-induced jaw-dropping increase in Nvidia shares has pushed the company's worth from $1 trillion to more than $2 trillion in just nine months, beating Amazon.com (AMZN.O), opens new tab, Google-parent Alphabet (GOOGL.O), opens new tab and Saudi Aramco (2222.SE), opens new tab on the way.

Nvidia's market capitalization presently sits at $2.38 trillion, underperforming Apple by only around $230 billion and Microsoft (MSFT.O), opens new tab by roughly $645 billion.
 
The persistent surge in shares of Nvidia, which controls 80% of the high-end AI chip market, has been essential in propelling Wall Street to record heights this year, while providing the business a more than 5% weightage on the benchmark S&P 500 index (.SPX), opens new tab.

Nvidia, which is up 95%, and Meta Platforms (META.O), opens new tab, which is up 46.6% so far this year, have also beaten shares of other members of the so-called Magnificient 7, demonstrating investors' voracious thirst for anything AI.
 
"Nvidia's rally reflects the incredibly strong fundamentals underlying its current business model," said Richard Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

"It is also finding strong speculative support as a favorite among long option buyers who have seen almost a straight upward climb throughout 2024."
 
Meanwhile, Apple, which is battling with decreasing iPhone sales, relinquished its title as the most valued U.S. corporation to Microsoft for the first time since 2021 in January.
 
In recent weeks, Nvidia also replaced Tesla (TSLA.O), opens new tab as Wall Street's most traded stock by value.

The stock's 12-month forward price-to-earnings ratio of 36.6 is lower than where it was a year ago despite the stock's excellent run as analysts upped their profit projections.
 
By contrast, Intel's PE multiple is 30.24 and that of Philadelphia SE Semiconductor Index (.SOX), opens new tab is 39.6, LSEG data indicated.
 
"Nvidia is in fact the cheapest of the "AI story" stocks out there," said David Wagner, portfolio manager at Aptus Capital Advisors.
 
"We continue to believe that in five years or 10 years we will all be talking about an industry that is far larger than the numbers being bandied about today."
 
However, there are hints Nvidia stock is reaching a top.
 
Over the next 12 months, Wall Street analysts' consensus target price predicts Nvidia will trade at $850 per share, below the recent closing price of $926, LSEG data revealed.
 
"Of course, it is extremely impossible for any mega-cap stock's price to continue to expand at this speed since the law of huge numbers ultimately comes into play. But the stock price might persist at these levels if the firm can continue to achieve or surpass the lofty expectations of analysts," Cherry Lane's Meckler said.

Source: https://www.reuters.com/

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